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Limit price
About: Limit price is a research topic. Over the lifetime, 4865 publications have been published within this topic receiving 148546 citations.
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TL;DR: In this paper, the effect of price caps on equilibrium production and welfare in oligopoly under demand uncertainty was analyzed and it was shown that price caps close to marginal cost may lead to zero production, depending on the nature of uncertainty.
Abstract: We analyze the effect of price caps on equilibrium production and welfare in oligopoly under demand uncertainty. We find that high price caps always increase production and welfare as compared to the situation without price cap. Price caps close to marginal cost may lead to zero production, depending on the nature of uncertainty. We characterize the optimal price cap and show that typically, the optimal price cap is bounded away from marginal cost.
51 citations
TL;DR: In this paper, the problem of price promotion in a supply chain comprising one manufacturer and one retailer, who take into account the reference price effects of consumers, is analyzed as a manufacturer-lead Stackelberg game.
Abstract: We consider the price promotion in a supply chain comprising one manufacturer and one retailer, who take into account the reference price effects of consumers. The problem is analyzed as a manufacturer-lead Stackelberg game. The results indicate that reference price effects could mitigate “double marginalization” effects, and improve the channel efficiency. We also show that the optimal price promotion benefits the manufacturer, retailer and consumers in consumer promotion model. Furthermore, we provide the conditions under which the retailer has an interest in offering price promotion to consumers. Finally, we employ numerical analysis to demonstrate more managerial insights.
51 citations
TL;DR: In this article, the authors evaluate the degree of pass-through from oil price shocks to disaggregate U.S. consumer prices and find significantly positive effects of the oil price shock only on energy-intensive CPIs, which imply that significantly positive, though quantitatively small, response of the total CPI is mainly driven by substantial increases in prices of energyrelated commodities.
51 citations
Posted Content•
TL;DR: In this paper, the authors survey the literature analyzing the price formation and trading process, and the consequences of market organization for price discovery and welfare, and develop a unified perspective on theoretical, empirical and experimental approaches.
Abstract: We survey the literature analysing the price formation and trading process, and the consequences of market organization for price discovery and welfare. We develop a united perspective on theoretical, empirical and experimental approaches. We discuss the evidence on transaction costs and the price impact of trades and its analyses in terms of adverse selection, inventory costs and market power. We review the extent to which the associated frictions can be mitigated by such features of market design as the degree of transparency, the use of call auctions, the discreteness of the pricing grid and the regulation of competition between liquidity suppliers or exchanges.
51 citations
TL;DR: In this paper, the authors develop a model of retail competition in which retailers select prices and investments in cost reduction, and an equilibrium is constructed in which several identical firms enter and then engage in a phase of vigorous price competition.
Abstract: We develop a model of retail competition in which retailers select prices and investments in cost reduction. An equilibrium is constructed in which several identical firms enter and then engage in a phase of vigorous price competition. This phase is concluded with a "shakeout," as a low-price, low-cost firm comes to dominate the market. A central feature of the equilibrium is that low prices are complementary with large investments in cost reduction. Even though the dominant firm's price rises through time, and initially may be below marginal cost, we argue that an interpretation of predatory pricing may be inappropriate.
51 citations